Articles Posted in Civil Procedure

Diem and Express filed patent infringement suits against BigCommerce in the Eastern District of Texas. BigCommerce is incorporated in Texas and lists Austin, Texas, where it is also headquartered, as its registered office. Austin lies in the Western District of Texas. BigCommerce has no place of business in the Eastern District. During the discovery phase of the cases, the Supreme Court issued its 2017 decision, “TC Heartland,” which reaffirmed that a domestic defendant corporation “resides” under 28 U.S.C. 1400(b) only in its state of incorporation. BigCommerce moved to dismiss Diem’s case and transfer Express’s case, arguing that it resides only in the Western District. The court denied the motion. The Federal Circuit disagreed, holding that a domestic corporation incorporated in a state having multiple judicial districts “resides” for purposes of the patent-specific venue statute, 28 U.S.C. 1400(b), only in the single judicial district within that state where it maintains a principal place of business, or failing that, the judicial district in which its registered office is located. View "In re: BigCommerce, Inc." on Justia Law

GNC sued ZTE in the Eastern District of Texas alleging infringement of its patents. ZTE moved to dismiss for improper venue under 28 U.S.C. 1406 and 1400(b). While that motion was pending, ZTE sought transfer to the Northern District of Texas or the Northern District of California under 28 U.S.C. 1404(a). The magistrate concluded that venue was proper in the Eastern District of Texas under the 1404(a) convenience analysis but did not rule on the motion to dismiss for improper venue under section 1406(a). The case was assigned to a new judge and a new magistrate, who denied the motion to dismiss, finding that ZTE failed to show it did not have a regular and established place of business in the Eastern District of Texas as required under the second prong of 28 U.S.C. 1400(b). The magistrate placed the burden on the objecting defendant to show improper venue and determined that ZTE had contracted with a call center in Plano, Texas, operated by another company, which constituted a physical place, and that ZTE transacted business there. The district court agreed. The Federal Circuit granted mandamus relief and remanded. The district court incorrectly assigned the burden of proof on venue and failed to fully consider the factors relevant to the question of whether the call center was that of ZTE. View "In re: ZTE (USA) Inc." on Justia Law

M-I Drilling, a U.K. company owns five U.S. patents; M-1 LLC, a U.S. company, is an exclusive licensee of the patents, which are claimed to cover pneumatic conveyance systems installed around oil drilling rigs and used to transfer drill cuttings from the oil rigs to ships. DAL, organized under the laws of and with its principal place of business in Brazil, is a subsidiary of Dynamic, a Minnesota corporation. The Brazilian state-owned oil company Petrobras requested proposals for the installation of pneumatic conveyance systems on ships. DAL won the bid and designed, manufactured, and operated conveyance systems from offshore oil drilling rigs onto two U.S.-flagged ships. M-I sued DAL in the District of Minnesota, alleging infringement. The court dismissed the case, finding that, although the alleged infringing activities took place on U.S.-flagged ships that are U.S. territory, the contract between Petrobras and DAL did not identify the ships on which DAL would make installations, so DAL did not purposefully avail itself of the privilege of conducting activities within the U.S. The Federal Circuit reversed. The district court erroneously focused on the contract between Petrobras and DAL. Even if the contract directed where the systems were installed and operated, DAL controlled the specifics of its continued performance. DAL kept the systems operating on the ships. Such deliberate presence of DAL and its systems in the U.S. enhance its affiliation with the forum and “reinforce the reasonable foreseeability of suit there.” View "M-I Drilling Fluids, U.K. Ltd. v. Dynamic Air Ltda." on Justia Law

Defendants produce or sell patented drug products containing the antiviral agent tenofovir alafenamide fumarate (TAF), which is used in the treatment of AIDS. Healthcare provides medical care to persons afflicted with AIDS, including providing antiviral drugs, including the TAF products that Healthcare buys from Defendants. Healthcare sought declarations of invalidity for patents purportedly covering TAF and various combination products so that it could partner with generic makers and purchase generic TAF on the expiration of the five-year New Chemical Entity exclusivity s(21 U.S.C. 355(j)(5)(F)(ii)). Healthcare filed suit two months after the FDA approved Genvoya®—the first TAF-containing product to receive FDA approval; other TAF products were still undergoing clinical trials. No unlicensed source was offering a TAF product or preparing to do so. Healthcare told the court that “none of the generic makers wanted to enter the market because there was the fear of liability.” The court ruled that Healthcare’s actions in encouraging others to produce generic TAF products and interest in purchasing such products did not create an actual controversy under the Declaratory Judgment Act. The Federal Circuit affirmed. The declaratory requirement of immediacy and reality is not met by litigation delay. Healthcare has not otherwise shown that there is a controversy of sufficient immediacy and reality to create declaratory judgment jurisdiction. Liability for inducing infringement requires that there be direct infringement. An interest in buying infringing product is not an adverse legal interest for declaratory jurisdiction. View "AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc." on Justia Law

Defendants produce or sell patented drug products containing the antiviral agent tenofovir alafenamide fumarate (TAF), which is used in the treatment of AIDS. Healthcare provides medical care to persons afflicted with AIDS, including providing antiviral drugs, including the TAF products that Healthcare buys from Defendants. Healthcare sought declarations of invalidity for patents purportedly covering TAF and various combination products so that it could partner with generic makers and purchase generic TAF on the expiration of the five-year New Chemical Entity exclusivity s(21 U.S.C. 355(j)(5)(F)(ii)). Healthcare filed suit two months after the FDA approved Genvoya®—the first TAF-containing product to receive FDA approval; other TAF products were still undergoing clinical trials. No unlicensed source was offering a TAF product or preparing to do so. Healthcare told the court that “none of the generic makers wanted to enter the market because there was the fear of liability.” The court ruled that Healthcare’s actions in encouraging others to produce generic TAF products and interest in purchasing such products did not create an actual controversy under the Declaratory Judgment Act. The Federal Circuit affirmed. The declaratory requirement of immediacy and reality is not met by litigation delay. Healthcare has not otherwise shown that there is a controversy of sufficient immediacy and reality to create declaratory judgment jurisdiction. Liability for inducing infringement requires that there be direct infringement. An interest in buying infringing product is not an adverse legal interest for declaratory jurisdiction. View "AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc." on Justia Law

Plaintiffs filed a patent infringement suit in the District of Delaware against HTC, a Taiwanese corporation with its principal place of business in Taiwan, and its wholly owned U.S. based subsidiary, HTC America, a Washington corporation with its principal place of business in Seattle. HTC and HTC America moved to dismiss for improper venue or, in the alternative, to transfer the case to the Western District of Washington pursuant to 28 U.S.C. 1404(a) or 1406(a). The district court found that venue was not proper as to HTC America but was proper as to HTC. Plaintiffs voluntarily dismissed their suit against HTC America without prejudice. HTC filed a mandamus petition seeking dismissal for improper venue. The Federal Circuit denied relief, rejecting HTC’s attempts to characterize the legal issue as “unsettled.” Suits against alien defendants are outside the operation of the federal venue laws. View "In re: HTC Corp." on Justia Law

In returns for 1995, 1996, and 1997, Stephens a shareholder of SF, a subchapter S corporation, reported "passive activity" passthrough income and passive activity losses (deductible from passive activity income) and passive activity credits (claimed against taxes allocable to passive activities). The IRS audited SF’s returns and Stephens’s individual returns for 1995 and 1996; the 1997 return was audited separately. The IRS concluded that Stephens had materially participated in some SF activities, finalized its audit of the 1995 and 1996 returns, and, in 2009, sent Stephens a notice of deficiency, as proposed in 2003 and 2008. Stephens did not contest the notice but made payment and never filed a formal refund claim, allegedly believing he could carry over the disallowed passive activity losses to 1997. The IRS extended the deadline for a 1997 refund claim to 2008. In 2009, Stephens mailed an amended 1997 return, seeking to carry over the 1995 and 1996 passive activity losses. In 2011, Stephens asserted the mitigation provisions, which, in specified circumstances, “permit a taxpayer who has been required to pay inconsistent taxes to seek a refund” otherwise barred by section 7422(a) (requiring that a “claim for refund or credit has been duly filed”) or section 6511(a), specifying the limitations period for refund claims. The IRS proposed to disallow the Stephenses’ refund claim as untimely and rejected an equitable recoupment argument. The Federal Circuit affirmed the dismissal of the Stephenses suit, concluding that a timely refund claim was a “prerequisite for a refund suit.” View "Stephens v. United States" on Justia Law

In returns for 1995, 1996, and 1997, Stephens a shareholder of SF, a subchapter S corporation, reported "passive activity" passthrough income and passive activity losses (deductible from passive activity income) and passive activity credits (claimed against taxes allocable to passive activities). The IRS audited SF’s returns and Stephens’s individual returns for 1995 and 1996; the 1997 return was audited separately. The IRS concluded that Stephens had materially participated in some SF activities, finalized its audit of the 1995 and 1996 returns, and, in 2009, sent Stephens a notice of deficiency, as proposed in 2003 and 2008. Stephens did not contest the notice but made payment and never filed a formal refund claim, allegedly believing he could carry over the disallowed passive activity losses to 1997. The IRS extended the deadline for a 1997 refund claim to 2008. In 2009, Stephens mailed an amended 1997 return, seeking to carry over the 1995 and 1996 passive activity losses. In 2011, Stephens asserted the mitigation provisions, which, in specified circumstances, “permit a taxpayer who has been required to pay inconsistent taxes to seek a refund” otherwise barred by section 7422(a) (requiring that a “claim for refund or credit has been duly filed”) or section 6511(a), specifying the limitations period for refund claims. The IRS proposed to disallow the Stephenses’ refund claim as untimely and rejected an equitable recoupment argument. The Federal Circuit affirmed the dismissal of the Stephenses suit, concluding that a timely refund claim was a “prerequisite for a refund suit.” View "Stephens v. United States" on Justia Law

In November 2014, the Board of Veterans’ Appeals denied Bly’s request for service connection for bilateral hearing loss. Bly appealed to the Veterans Court. After his opening brief was filed, Bly and the government filed a joint motion for partial remand. The Veterans Court granted the motion, citing to Rule 41(b) of the Veterans Court’s Rules of Practice and Procedure, and noting that “this order is the mandate of the Court.” Bly applied for attorneys’ fees and expenses under the Equal Access to Justice Act (EAJA), 28 U.S.C. 2412, 31 days later. Remand orders from the Veterans Court may entitle veterans to EAJA fees and expenses. Under 28 U.S.C. 2412(d)(1)(B), such EAJA applications must be made “within thirty days of final judgment in the action.” The Veterans Court reasoned that its judgment became final immediately because the order remanded the case on consent and stated that it was the mandate of the court. The Federal Circuit vacated the denial of his application, reasoning that the consent judgment at issue became “not appealable” 60 days after the entry of the remand order under 38 U.S.C. 7292(a). View "Bly v. Shulkin" on Justia Law

Xitronix filed, in the U.S. District Court for the Western District of Texas, a “Walker Process” monopolization claim under section 2 of the Sherman Act and sections 4 and 6 of the Clayton Act based on the alleged fraudulent prosecution of a patent. The parties believed that the Federal Circuit had jurisdiction over an appeal under 28 U.S.C. 1295(a)(1). The Federal Circuit transferred the case to the Fifth Circuit, citing the Supreme Court’s 2013 decision, Gunn v. Minton. The Xitronix complaint alleges that KLA “engaged in exclusionary conduct by fraudulently prosecuting to issuance the [’]260 patent” and its conduct “was and is specifically intended to monopolize and destroy competition in the market” and alleges KLA intentionally made false representations to the Patent Office on which the examiner relied during prosecution. On the face of the complaint, no allegation establishes “that federal patent law creates the cause of action.” The only question is whether the monopolization allegation “necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.” There is nothing unique to patent law about allegations of false statements. View "Xitronix Corp. v. KLA-Tencor Corp." on Justia Law